The relationship between energy and development in developing countries: A statistical perspective on volatility dynamics

Authors : Michael Sunday Olayemi, Atabek Movlyanov, Oluwamayowa Opeyimika Olajide

Pages : 1194-1208

Doi:10.17714/gumusfenbil.1753096

View : 54 | Download : 155

Publication Date : 2025-12-15

Article Type : Research Paper

Abstract :This study investigates the relationship between energy market volatility and development outcomes across six developing economies—Nigeria, Ghana, Kenya, India, Pakistan, and Bangladesh—using annual time-series data (2000–2020), totaling 126 country–year observations. These countries were selected based on comparable energy dependency, developmental challenges, and data availability across Sub-Saharan Africa and South Asia. Five key indicators were analyzed: energy consumption per capita, crude oil prices, GDP per capita, industrial output index, and the Human Development Index (HDI)—each representing economic performance and social welfare dimensions. Volatility was modeled using the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) framework and its asymmetric extensions (EGARCH and TGARCH) to capture persistence and shock asymmetry in energy variables. Results show high volatility persistence across all countries (α + β ≈ 0.95, p 0, p < 0.05) in Nigeria, India, and Pakistan indicate that negative shocks—such as price surges or supply disruptions—produce stronger volatility responses than positive shocks. Regression results further reveal that energy volatility negatively and significantly affects HDI (β = –0.042, p < 0.01), while energy consumption (β = 0.675, p < 0.001) and industrial output (β = 0.314, p < 0.05) contribute positively to economic growth and welfare. The use of annual data is justified by the macro-structural nature of energy–development linkages in developing economies, where high-frequency data are scarce and policy effects unfold over multi-year periods. The findings demonstrate that volatility is a major development constraint and underscore the importance of energy diversification, governance reform, and statistical capacity building. These results provide empirical support for integrating volatility management into national energy and development planning, contributing toward achieving Sustainable Development Goal 7 (Affordable and Clean Energy) and Goal 8 (Decent Work and Economic Growth).
Keywords : Enerji oynaklığı, GARCH modelleri, Gelişmekte olan ülkeler, İnsani Gelişme Endeksi, Enerji çeşitlendirmesi, Sürdürülebilir kalkınma

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